Prasad and Company, Tiruppur V. ITO, Tiruppur

ITA 1353/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90490 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN IRS
• Assessee Lawyers: T BANUSEKAR
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 1353/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010) PRASAD AND COMPANY, NO.24,GANTHINAGAR, 3 RD STREET, TIRUPUR 641 603 [PAN: AAIFP 9785H] ( &' /APPELLANT) VS THE INCOME TAX OFFICER, WARD I(4), TIRUPUR. ( '(&' /RESPONDENT) / APPELLANT BY : T. BANUSEKAR, C.A. / RESPONDENT BY : SHRI. N. MADHAVAN, IRS, JCIT. /DATE OF HEARING : 17.06.2015. /DATE OF PRONOUNCEMENT : 19.06.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, COIMBATORE , DATED 18.02.2014 FOR THE ASSESSMENT YEAR 2009-2010. I.T.A.NO.1353/MDS/2014 :- 2 -: 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL I S WITH REGARD TO NON GRANT OF DEDUCTION U/S.80IB(10) OF THE INCOM E TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C LAIMED DEDUCTION U/S.80IB(10) OF THE ACT ON THE PROFIT EA RNED AT D1,15,25,539/- AND THE CLAIM OF THE ASSESSEE WAS RE JECTED BY THE ASSESSING OFFICER ON THE REASON THAT THE ASSESSEE I S A CONTRACTOR AND NOT A DEVELOPER AFTER EXAMINING THE AGREEMENT ENTE RED BY THE ASSESSEE WITH THE PURCHASER IN VIEW OF THE EXPLANAT ION INSERTED W.R.E.F. 01.04.2001 BY THE FINANCE ACT 2009. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). 4. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE LD. AUTHORISED REPRESENTATIVE FOR ASSES SEE SUBMITTED THAT THE ASSESSEE IS A DEVELOPER WHO HAS UNDERTAKEN CON STRUCTION OF FLATS WITH VARIOUS OWNERS THOUGH ASSESSEE IS NOT A OWNER OF THE LAND. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE FURTHER SUBMITTED THAT THE I.T.A.NO.1353/MDS/2014 :- 3 -: ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT IN VIEW OF THE FOLLOWING DECISIONS:- (I) CIT VS. RADHE DEVELOPERS (2012) 341 ITR 403 (GUJ). (II) CIT VS. SANGHVI AND DOSHI ENTERPRISE (2013) 214 TAX MAN 463 (MAD). (III) CIT VS. MAHALAKSHMI HOUSING 2012-TIOL -951-HC- MAD IT. (IV) CIT VS. CEEBROS PROPERTY DEVELOPMENT (P) LTD. (2012 ) 83 CCH 98 (MADRAS HC) (V) CIT VS. MOON STAR DEVELOPERS 2014 (4) TMI 1042-(GUJ H.C) 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRE SENTATIVE RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SU BMITTED THAT IN THE AGREEMENT, THE ASSESSEE WAS CALLED AS CONTRACTOR AND IT CANNOT BE CONSIDERED AS DEVELOPER AND ASSESSEE HAS NOT T AKEN ANY RISK OR MADE ANY INVESTMENT IN THE PROJECT AND THE COST OF CONSTRUCTION WAS INCURRED BY RESPECTIVE FLAT OWNERS AND AS SUCH DEDU CTION U/S.80IB(10) CANNOT BE GRANTED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE CONTENTION OF THE ASSESSEES COUNSEL IS THAT THE ASSESSEE THOUGH IS NOT OWNER OF THE LAND, IT HAS DEVELOPED THE HOUSING PROJECT, PROVIDING THE NECESSARY INFRASTRUCTURE, PR OVIDING HOUSING LOANS FOR THE BUYERS, IT HAS INVOLVED FROM THE COMM ENCEMENT OF THE PROJECT TO THE COMPLETION OF THE PROJECT, AND IN V IEW OF THE ORDER OF THE CO-ORDINATE BENCH IN THE CASE OF SANGHVI & DOSHI ENTERPRISE VS. I.T.A.NO.1353/MDS/2014 :- 4 -: ITO (2011) 131 ITD 151 (CHEN) , THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. ADMITTEDLY, AS HELD BY THE CO- ORDINATE BENCH IN THE CASE OF SANGHVI & DOSHI ENTERPRISE CONFIRMED BY MADRAS HIGH COURT, THE ASSESSEE NEED NOT BE A OW NER OF THE LAND TO GRANT DEDUCTION U/S.80IB (10), IF THE ASSESSEE U NDERTAKES ALL THE RISK INVOLVED FROM THE COMMENCEMENT OF THE PROJECT TO THE COMPLETION OF THE PROJECT. IN OTHER WORDS, IF THE ASSESSEE UNDERTOOK DEVELOPMENT OF THE PROJECT IN TERMS OF SECTION 80IB (10) OF THE ACT, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IB(10) OF THE ACT. IN OUR VIEW, TO GIVE A FINDING WHETHER THE ASSESSEE IS AC TUALLY A DEVELOPER OR CONTRACTOR, ONE HAS TO SEE THE AGREEMENT THE AS SESSEE ENTERED WITH THE PROSPECTIVE BUYER. THOUGH THERE IS AN ELA BORATE DISCUSSION IN THE ASSESSMENT ORDER, THE CONTENTS OF ALL THE AG REEMENTS WHICH THE ASSESSEE ENTERED WITH THE PROSPECTIVE BUYER WER E NOT DISCUSSED. IN OUR OPINION, IT IS APPROPRIATE TO GO THROUGH THE AGREEMENTS ENTERED WITH THE PROSPECTIVE BUYERS ALONGWITH FINAN CIAL STATEMENTS TO SEE THE DETAILS OF INVESTMENT MADE BY ASSESSEE AND DECIDE THE ISSUE IN THE LIGHT OF THE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF SANGHVI & DOSHI ENTERPRISE [2013] 29 TAXMANN.COM 386 (MADRAS ). ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO EXAMINE WHETHER THE ASSESSEE MADE INVESTMENT BY I.T.A.NO.1353/MDS/2014 :- 5 -: ITSELF, EXECUTED DEVELOPMENT WORK AND CARRIED OUT C IVIL WORKS, DEPLOYMENT OF TECHNICAL PERSONAL, PLANT AND MACHIN ERY, TECHNICAL KNOWHOW, EXPERTISE AND FINANCIAL RESOURCES BEFORE HANDING OVER THE COMPLETED PROJECT TO THE OWNER OF THE FLATS. IF IT IS SO, THEN THE ASSESSEE HAS TO BE TREATED AS DEVELOPER RATHER TH AN CONTRACTOR. IN OTHER WORDS, THE ASSESSEE WOULD NOT BE DENIED DEDUC TION U/S.80IB(10) IF THE CONTRACT INVOLVES DESIGN, DEVEL OPMENT, FINANCIAL INVOLVEMENT AND TECHNICAL KNOWHOW FROM ASSESSEES S IDE ITSELF. 8. ACCORDINGLY, WE REMIT THE ENTIRE ISSUE TO THE F ILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1353/MDS/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 19TH DAY OF JUNE, 2 015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHALLA NAGENDRA PRASAD) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' /CHENNAI. #$ /DATED:19.06.2015. KV $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF. I.T.A.NO.1353/MDS/2014 :- 6 -: